The Office of Federal Housing Enterprise Oversight is seeking an increase of more than 37% in its budget for fiscal 2001.
Director Armando Falcon said Fannie Mae and Freddie Mac, which his office is responsible for overseeing, have doubled in size since 1993, when the office was created. "To ensure they are operating in a safe and sound manner, as required by Congress," he said in a statement, "OFHEO needs more resources to keep pace with this extraordinary growth."
Fannie's and Freddie's risk has doubled since 1993, to over $2 trillion, the office said, and their combined retained mortgage portfolios have grown by over 350%. "The scope and complexity of the enterprises' housing finance activities have expanded dramatically, as has the range of risks embedded in those activities," the office said in a statement.
The office is not funded with taxpayer money. Its budget comes from the government-sponsored enterprises it oversees, which split the bill according to their assets.
The budget request followed a speech by Mr. Falcon to America's Community Bankers in which he said his office would broaden the view of its mission and seek congressional approval to remove it from the appropriations process.
Many community bankers fear they may enter business lines that put them into competition with small banks, to maintain returns to shareholders. The bankers argue that quasi-governmental status gives Fannie and Freddie advantages with which they cannot compete.
A Fannie Mae spokesman said his company is opposed to removing its regulator from the appropriations process.
"We feel that remaining under the appropriations process provides for appropriate oversight of OFHEO," he said.
He declined to discuss the office's request for more money, but a spokeswoman for Freddie Mac said it "makes sense" that the office would need more funding. She added that it is up to Congress to decide.
The 37% budget increase requested includes money to hire six examiners to look at the GSEs' "use of automation as a risk management tool," according to a letter from Mr. Falcon to the Office of Management and Budget. Fannie and Freddie's automated systems "are a cornerstone of the orderly and sound operation of the mortgage market," he wrote.
